Picking Individual Stocks

A factor affecting stocks’ sensitivity to movements in the overall market can be measured by VIX, the Chicago Board Options Exchange’s Volatility Index. Any time volatility decreases, correlations automatically decrease.

 

Research from UC Berkeley suggests “< 1% of individuals who frequently trade can consistently outperform the market through skill. Over the long run, the rest would be better off investing in low-cost index funds benchmarked to the broad market.” According to a WSJ September 28, 2013 article, “Arguments in favor of index funds are even stronger for international than for domestic stocks.”